After flagging Stockland Corporation Ltd (ASX: SGP) as one of my shares to watch this week following its acquisition of Sugarland Shoppingtown Bundaberg, the company released a second announcement detailing divestment of a 50% stake in its rejuvenated Townsville shopping centre.
Ironically, after purchasing the Bundaberg centre from a subsidiary of AMP Limited (ASX: AMP), Stockland will be selling 50% of Townsville to another AMP Capital managed fund.
Managing Director Mark Steinert said that the sale is part of Stockland's capital management strategy and gains Stockland a secure, high-quality partner whilst allowing the funds from the sale to be recycled into 'accretive opportunities'.
It also reduces Stockland's exposure to the Townsville area – which is currently 8% of Stockland's total portfolio – whilst allowing the company to pursue other high growth areas in Australia.
Investors will be glad to know that Stockland still retains all management, leasing, and development rights over the asset, making the sale a shrewd defensive move whilst still keeping overall control.
The Townsville shopping centre has the potential to be one of the best precincts in Queensland, if not Australia, thanks to insightful development and its commanding position athwart two main roads.
If you picture a major four-way intersection dividing a land mass into four quarters, and then imagine that Stockland owns all the adjacent land in the (arbitrary) south-west, south-east, and north-east quadrants, that's the Townsville asset.
The south-west quadrant consists of the newly revamped Stockland Townsville, containing North Queensland's only full-scale Myer, a Big W, Woolworths, 4 'mini-majors', 180 specialty stores and a 750-seat dining area.
Directly opposite, in the south-east quadrant is a block of vacant land which has been approved for development as an 'entertainment and lifestyle' precinct that will complement existing developments extremely well.
In the north-east quadrant, Stockland owns another shopping centre which generally serves more residential traffic; containing several banks, a butcher, Coles, tyre-fitting services and a number of specialty stores.
Combine the three and you have massive, diverse facilities with enormous potential to capture passing car traffic and draw foot traffic from one centre to the next.
Key problems will be maintaining car parking and effectively channelling traffic between the centres since four-lane roads can be difficult to cross at the best of times.
Stockland has a good record on both fronts so far though, and I'd say it's highly likely that the company's Townsville assets will become even more of a gold mine as they evolve.
